TaxTMI 
TaxTMI 
2026 (5) TMI 235
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....n the business of software development and export, claimed exemption under Section 10B of Income Tax Act. A sum of Rs. 149.47 crores from out of the total income, for the assessment year 2002- 2003. 3. The Assessing Officer reduced the exemption in respect of expenditure incurred in foreign currency and part of telecommunication charges, which was attributable to the delivery of software outside India. Particularly, the assessee had made a remittance of Rs. 5,42,18,347/- for hiring 'International Private Leased Circuits', (IPLC) on which tax was not deducted at source under Section 195. The deduction sought for the revenue expenditure was disallowed, terming it as 'Royalty' and citing Section 40(a)(ii) of the Income Tax Act. 4. The im....
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.... circumstances of the case the Income Tax appellate Tribunal is right in law in holding that tax has to be deducted under Section 195 in respect of payments made to entitles having business/Permanent establishment outside India irrespective of the fact whether such recipient is subject to tax in India or not? 6. The Learned Counsel appearing for the appellant submitted that, insofar as the substantial questions of law 2 & 3 are concerned, the assessment has been re-computed, therefore those two questions of law are not pressed. Insofar as the 4th substantial question of law, the issue is covered by the judgment of this Court in the appellant's own case in Tax Case Appeal Nos.277 to 280 of 2016, by order dated 25.11.2025, in respect of th....
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....owing the judgment of the Hon'ble Supreme Court rendered in Engineering Analysis Centre of Excellence Pvt. Ltd v. CIT reported in (2021) 432 ITR 471 (SC), which overruled its earlier view in M/s.Verizon Communications Singapore PTE Ltd v. ITO (International Taxation) reported in 261 ITR 575 (Mad), the Madras High Court has held that the explanation brought into the Act by virtue of the Finance Act, 2012, cannot have retrospective application. 10. The following observations of the Hon'ble Supreme Court were relied and extracted by the Division Bench in its order. "77. It is equally difficult to accept the learned Additional Solicitor General's submission that Explanation 4 to Section 9(1)(vi) of the Income Tax Act is clarific....
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....f the Income Tax Act is not clarificatory of the position as of 1-6-1976, but in fact, expands that position to include what is stated therein, vide the Finance Act, 2012." 11. While concluding, the Division Bench of this Court, in the assessee's own case, answered the issue in favour of the assessee with the following observations: "12.8.1. The view taken in the case of Verizon Communications Singapore PTE Ltd v. ITO (supra) is that even if the assessee does not have an effective control over the equipment, the use of process will render payment liable to be treated as royalty was based on application of Explanations 4, 5 and 6 added by way of Finance Act, 2012 and we see from a reading of the said judgment, that the assessee&#....